State treasurer: Leg. should avoid 'felony gimmicks' to fix budget

By CHRIS GRYGIEL, SEATTLEPI.COM STAFF

Updated 10:00 pm, Thursday, March 24, 2011

State Treasurer Jim McIntire on Friday warned lawmakers not to use tricks like adding an extra month's revenue and borrowing against future earnings to fix the state's bleeding operating budget, calling such moves "felony gimmicks."

Washington budget deficit for the next two years is at least $5.1 billion - about 20 percent of the current spending plan. Lawmakers will have to make further, large cuts to education, health care and public safety. In order to mitigate some of those reductions, lawmakers have floated some controversial ideas - like adding an extra, 25th month to the current 24-month budget time period and borrowing money against expected future revenues, a practice known as securitization.

Some Oregon Residents Upset at Prospect of Pumping Their Own GasBuzz 60

Doug Baldwin playcallingBy Michael-Shawn Dugar, SeattlePI

Van Crashes Into Pedestrians Injuring SixAssociated Press

US military to accept transgender recruits after Trump drops appealEuronews

Snow on Christmas Eve, 2017Seattle Post-Intelligencer

Ice carving at WinterfestSeattle Post-Intelligencer

Amtrak derails near OlympiaGrant Hindsley / SeattlePI

Golden retriever meets Darth Vader and EwokSeattle Post-Intelligencer

In an interview with seattlepi.com, McIntire said such tactics would only exacerbate Washington's problems.

"I really don't see a good rationale for the Legislature to be trying to sell junk bonds to finance operating activates for the next two years. It's not a sustainable way to do things," he said.

In 2002, the Legislature borrowed $450 million through securitization of future payments from the national settlement with tobacco companies. However Gov. Chris Gregoire, who has also criticized the non-traditional budget ideas being considered, has said that scheme will end up costing taxpayers about $1 billion in interest and principal.

"This biennium, we'd have an extra $100 million to spend on higher education and health care if we hadn't done (securitization) in 2002," the treasurer said.

Lawmakers could, conceivably, borrow further money tied to the state's tobacco money, or seek a loan based on future revenue from liquor and lottery sales. But McIntire warned that credit rating agencies would frown on that practice.

"Wall Street is watching," McIntire said. "To go to some kind of securitization scheme at this point is really kind of a very bad signal to send to the investor community."

He said adding an extra month to the 24-month revenue cycle was also a "felony gimmick," which McIntire said was a budget fix that couldn't be resolved in the next two years. He and Gregoire have said the last time the state employed such a tactic - in 1971 - it took 16 years get the state's books back in order.

McIntire's recommendation to the Legislature, which must write the 2011-13 budget by next month, was to make the difficult decisions now.

"If you're going to have to cut things, you should own up to it and deal with it and do it."